 You don't need to be an 'investor' to invest in Singletrack: 6 days left: 95% of target - Find out more
Just been informed that we can now only make %age changes to the amount we the employee contribute, in Jan and Aug (they failed to count 6 months apart).
Can't find anything that defines how often we should be able to adjust our own contributions, but given the rising costs at the moment I can only see this dissuading people from putting much in as a change in costs in Jan has to be dealt with till August payday.
Is there any guidance I'm missing or can they do what they want?
Its quite rare that anyone will change the amount they are paying into a pension.
Most people will only review it once a year, so i'm going to guess that payroll just want to reduce the admin burden to twice a year as there is little take up.
presume this is a salary sacrifice arrangement, whereby you can select your benefits and have your company take it as part of sal sac.
There's nothing explicit on whether your co should / must provide sal sac at all; indeed many do not.
Ours only allow one benefit selection window each year, as they deem that if they offered it more frequently, then they could be at risk of HMRC challenging its status. (garbage, in my professional opinion, but I work for an ultra cautious professional services company, who really do not want any risk of regulatory/ legislative challenge).
I have plenty / most of my clients who allow a monthly amendment, and who have quite a bit of admin in processing it (the main items are changing the pension contribution %, doing sal sac for technology purchases).
I'd love it, because I could fine-tune my pension contributions to meet the various thresholds, rather than guessing.
There's nothing to stop you making additional contributions, not under sal sac, to your own pension, above and beyond that administered by your co. Clearly this would not benefit from sal sac (NI deductible and you would have to reclaim any higher rate tax back separately), nor a company match in the contribution.
The company has to offer at least the basic pension contribution framework as set out under Auto Enrolment. If you are already receiving this (or have positively opted out of it), then there's nothing to force the company to allow you to make monthly fine tuning.
Sorry.
Does your scheme have rules and trustees? If so maybe complain to them? Mine can be changed monthly. People often do so at the back end of the year to maintain certain tax brackets.
Another thing I forgot to mention.
I'm working with a client who allows monthly changes to be made to sal sac.
They are not allowed to let you sal sac below national minimum wage, but are having a really hard time in keeping track of this in practice. I can see the case for allowing occasional (perhaps quarterly) amendments, to keep things manageable.
We can change ours once a year. We get an email about a month before and told that if we want to change it to fill in the form and send it off.
I can see why they have that rule, it reduces the admin for making changes, which with pensions is probably considerable...
I don't think it's unreasonable.
Our company only allows you to make changes twice a year (although unspecified months) to avoid the admin overhead from occasional individuals who want to change it every month. I've worked with some of them.
If you are above the amount your employer matches (or part matches) you can usually pay money directly into the scheme, the pension company will then sort out the tax reclaim bit for you.
the pension company will then sort out the tax reclaim bit for you.
Only basic rate as they won't know your tax code etc.
Higher rate relief, if applicable, has to be claimed by the individual.
Thanks for that extra bit @footflaps. Was never much of an issue where I work although with the static tax thresholds more will be paying higher rate tax now.
I've no idea how often we can change ours, it's limited to a maximum match of 7.5%, so that's what mine is set to.
My company element is fixed
My contribution i can change monthly
Not so simple, I'm afraid.
If it is under sal sac, then tax relief is automatic (the gross amount is paid into your pension).
if done outside sal sac, then generally you need to claim the HR tax element back yourself from HMRC through self assessment / there is a specific form.
Thanks for replies folks, it seems they can and have made this change. They claimed 'as the company grows' inspite of having dropped half it's staff this year through a mass redundancy!
I think it acts to discourage people who may be able to pay more in but want to be cautious of new changes in costs.
They also didn't offer any explanation of why, despite asking in a recent survey if we liked the transparency and way decisions are made 🙄
Mine is a once a year thing in line with any other selectable benefits, with a limit of 6% which is matched by company.
with a limit of 6% which is matched by company
As in you can only salary sac into a pension a max of 6%? If so that seems low, not actually sure what the cap is on ours (they only match to 10% though) but if there is one it's probably minimum wage related rather than an arbitrary cap.
We can change ours every month. (We get a bonus in Dec and a lot of people increase their % that month to put a lump some into their pension.)
For us its salary sacrifice so technically there is no Employee/Employer split (its all employer) but they still call it that to simplify explaining it. Our contribution is matched up to 10% Employers with no limit on Employees (other than the normal minimum wage constraints).